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California Regulators Say Uber, Lyft Drivers Are Employees (1)

June 11, 2020, 12:12 AM; Updated: June 11, 2020, 8:54 PM

The California agency that regulates buses, limousines, and app-based transportation companies will consider Uber Technologies Inc. and Lyft. Inc. drivers as employees and not independent contractors, as long as a court decision or voter-backed initiative doesn’t change the law.

The California Public Utilities Commission (CPUC) published an order Tuesday that determines that the drivers are employees under A.B. 5, the new California law that makes it harder for employers to classify their workers as independent contractors.

Classifying drivers as contractors relieves the companies of certain responsibilities as employers, such as paying unemployment insurance and worker’s compensation. Uber, Lyft, and other app-based companies say an employee model would diminish the flexible nature of the work that attracts many drivers.

“For now, TNC drivers are presumed to be employees and the Commission must ensure that TNCs [transportation network companies] comply with those requirements that are applicable to the employees of an entity subject to the Commission’s jurisdiction,” Commissioner Genevieve Shiroma wrote.

The order is a response to a Dec. 19, 2019, ruling from a CPUC administrative law judge asking for a briefing on the applicability of A.B. 5 to the companies.

Uber has challenged A.B. 5, and Uber and Lyft have been sued by cities and their drivers for not complying with the law. The companies also are behind a ballot initiative to exempt drivers from employee status while offering a minimum wage and protections against discrimination and harassment.

The CPUC is developing regulations for app-based driver companies on sexual harassment, data collection, and other areas. But the agency does not oversee labor law, said Stacey Wells, spokeswoman for the Protect App-Based Drivers and Services campaign behind the ballot initiative.

“This is an outrageous political stretch and not what drivers want,” Wells said in a statement. “By a 4-1 margin, independent surveys show app-based drivers prefer to be independent contractors over employees.”

Lyft said in a statement that the presumption was flawed and that drivers prefer to remain independent contractors.

Uber did not respond to a request for comment.

(Updates a story from June 10. New information in paragraphs 5 and 10, and updated information in paragraph 9. )

To contact the reporter on this story: Tiffany Stecker in Sacramento, Calif. at tstecker@bgov.com

To contact the editors responsible for this story: Karl Hardy at khardy@bloomberglaw.com; Tina May at tmay@bloomberglaw.com

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